The Federal Trade Commission filed suit on Wednesday against DirecTV, claiming that the satcaster is engaging in deceptive advertising practices in marketing a discounted 12-month programming package.
The FTC contends that the advertisements fail to clearly disclose that the 12-month package requires a two-year contract, and that the cost increases by up to $45 per month in the second year. It also says that DirecTV does not clearly disclose that early cancellation fees of up to $480 apply if subscribers cancel before the end of the two years.
“It’s a bedrock principle that the key terms of an offer to a consumer must be clear and conspicuous, not hidden in fine print,” FTC chairwoman Edith Ramirez said in a statement.
The complaint was filed in the U.S. District Court in San Francisco. The commission voted 5-0 to approve the complaint.
DirecTV called the decision “flat-out wrong and we will vigorously defend ourselves, for as long as it takes.
“We go above and beyond to ensure that every new customer receives all the information they need, multiple times, to make informed and intelligent decisions. For us to do anything less just doesn’t make any sense.”
The FTC also claims that DirecTV failed to disclose that an offer of free premium channels for three months is in fact a “negative option continuity plan,” requiring customers to proactively cancel to avoid automatic charges to their credit or debit cards.
AT&T’s proposed merger with DirecTV is awaiting review by the Department of Justice and the FCC.